Concealment penalty turns on law in force when satisfaction is recorded, and the statutory presumption must be rebutted by the assessee.

For concealment penalty, the governing law is the law in force when the assessing authority reaches satisfaction and initiates penalty proceedings, not the law on the date of the original return. The majority also held that once the statutory Explanation applies because returned income falls below the assessed income by the required margin, the burden shifts to the assessee to show absence of fraud or gross or wilful neglect. On the record, the assessee produced no material to rebut that presumption, and the unexplained cash credits and failure to prove their genuineness were sufficient to establish concealment. The penalty was therefore upheld and the Tribunal's cancellation set aside.

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Issues: (i) Whether penalty for concealment was to be governed by the law in force on the date of the original return or by the law in force on the date when the assessing authority reached satisfaction in the reassessment proceedings. (ii) Whether the assessee had discharged the burden under the Explanation to the penalty provision, or alternatively, whether the Revenue had otherwise proved concealment so as to sustain penalty.

Issue (i): Whether penalty for concealment was to be governed by the law in force on the date of the original return or by the law in force on the date when the assessing authority reached satisfaction in the reassessment proceedings.

Analysis: The Division Bench considered competing lines of authority on the relevant point of time for application of the penalty law. One view treated the original return as decisive, while the other treated the date when concealment was detected and penalty proceedings were initiated after assessment as the relevant date. The majority held that the crucial date is the date on which the assessing authority reaches satisfaction and initiates penalty proceedings, not the date of the original return. On that footing, the law then in force governed the penalty proceedings.

Conclusion: The penalty proceedings were governed by the law applicable on the date of satisfaction in the reassessment proceedings, and not by the law in force when the original return was filed.

Issue (ii): Whether the assessee had discharged the burden under the Explanation to the penalty provision, or alternatively, whether the Revenue had otherwise proved concealment so as to sustain penalty.

Analysis: The majority held that once the Explanation applied, the returned income being less than the assessed income by the statutory margin cast the burden on the assessee to show absence of fraud or gross or wilful neglect. The assessee produced no material sufficient to displace that presumption. The materials on record, including the unexplained cash credits and the failure to substantiate their genuineness, were held adequate to establish concealment even on the principles stated in the earlier concealment case law relied upon by the assessee.

Conclusion: The assessee failed to rebut the statutory presumption, and concealment was established; the penalty was validly imposed.

Final Conclusion: The reference was answered in favour of the Revenue. The Tribunal's cancellation of the penalty was set aside as unsustainable on the majority view.

Ratio Decidendi: For concealment penalty, the governing law is the law in force when the assessing authority reaches satisfaction and initiates penalty proceedings, and where the statutory presumption under the Explanation is attracted, the assessee must rebut it by showing absence of fraud or gross or wilful neglect.

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